WESM expects power rates falling next year

Philippine Electricity Market Corp., the operator of the Wholesale Electricity Spot Market, expects power rates to sustain a downtrend next year, after settlement prices plunged to a five-year low last month.

PEMC president Melinda Ocampo told reporters that effective settlement spot prices at WESM, the country’s trading floor of electricity, hit a five-year low of P2.27 per kilowatt-hour in November.

“Hopefully, [prices will decline given] the fact that there are now a lot of generators. And then for January to February, because there is less demand,” Ocampo said, when asked whether the low WESM prices would spill over to 2017.

Spot market prices refer to the average rates paid by wholesale customers for energy purchased from the spot market. The November price is the lowest since 2011 when it also reached P2.27 per kWh.

“Such a sharp decline in market prices is welcome as long as wholesale customers like distribution utilities pass on the historically low market prices to their end users,” Ocampo said.

“The decrease in WESM prices was driven by higher energy volume offers in the market and cooler temperature,” she said.

Customers sourced 19 percent of their power supply requirements in the spot market during the November billing month, the highest since March 2009.

Manila Electric Co., the country’s biggest power distributor, sourced 23 percent of its power requirements from WESM in November.

Meanwhile, the Energy Department said it was preparing to minimize the impact of the impending maintenance shutdown of Malampaya gas-to-power project for 20 days.

Energy spokesman Felix William Fuentebella said the shutdown on Jan. 28 to Feb. 16 would have an impact on power supply that could trigger higher electricity prices.

Fuentebella said the department would pursue “coordination to ensure sufficiency” of supply during the affected period.

The Malampaya shutdown is seen to affect gas supply to three major power plants including Sta. Rita, San Lorenzo and Ilijan with a combined capacity of 2,700 MW.

“There will be [price] simulation first. Then we will look into coordination, market and regulatory management,” he said.